(Adds details, economists' comment)
SINGAPORE, Dec 31 (Reuters) - Singapore's economy grew by
1.2 percent in 2012, Prime Minister Lee Hsien Loong said on
Monday, indicating the city-state slipped into a recession in
the last three months of the year.
Credit Suisse economist Michael Wan, in a note to clients,
estimated that 1.2 percent growth for the year implies the
economy "contracted sequentially by 2 percent quarter-on-quarter
annualised in the fourth quarter."
"Following the minus 5.9 percent quarter-on-quarter
seasonally adjusted and annualised rate in the previous quarter,
we think that the economy has likely entered a technical
recession," Wan added. His estimates assumed no revisions to
data for the first three quarters.
Singapore, whose trade is around three times GDP, has been
badly hit by the weakness in Western economies that has crimped
demand for many of its exports. The city-state's electronic
manufacturers have also failed to tap surging demand for smart
phones, unlike rivals in South Korea and Taiwan.
For the first 11 months of 2012, electronics production fell
11.1 percent compared with the same period last year,
underscoring the weakness in the export markets, according to
industrial production data released last week.
Lee, in his New Year message, said "Growth was slower this
year, at 1.2 percent. The weak U.S., European and Japanese
economies dampened our growth, but some industries have also had
difficulty hiring the workers they need to grow."
Looking ahead, the Singapore prime minister said the economy
will likely expand by 1-3 percent in 2013, reiterating an
earlier government forecast.
"In our new phase, we must expect slower growth than we have
become accustomed to," Lee added, referring to government
efforts to raise productivity rather than rely on low-cost
foreign workers to boost economic activity.
Singapore's economy grew by 4.9 percent in 2011 and the
government's latest forecast for 2012, just made in November,
had been for expansion of around 1.5 percent. The 1.2 percent
growth cited by Lee was, however, slightly higher than the 1.1
percent estimate of most economists in a Reuters poll.
Credit Suisse's Wan said the government measures to make it
harder for firms to hire cheap labour from abroad will crimp
Singapore's economic performance in the near term.
"We expect less productive companies to start to get weeded
out in 2013 as restructuring bites... Businesses that have not
made the necessary adjustments to survive in the island-state's
high-cost environment will choose to relocate, or throw in the
towel completely," he said.
The Straits Times newspaper reported earlier on Monday that
some retailers in the city-state have complained of poor
December sales, with revenue rising by just 5 percent despite
deep discounts and a boom in visitor arrivals.
Rising rents and the strong Singapore dollar have made the
city-state more expensive, and people are doing more of their
shopping when they are in other countries or buying off the
internet, the retailers said.
The government will release advance estimates for the fourth
quarter on Jan 2.
(Reporting by Kevin Lim; Editing by Richard Borsuk)
Source: http://news.yahoo.com/1-singapore-economy-grew-1-2-pct-2012-094224793--business.html
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